Simulation of business transformation outsourcing

ABSTRACT

An example of a solution provided here comprises: performing a benefits simulation, performing a process simulation, performing an information technology simulation, performing a value simulation, providing interactions among the simulations, and representing with the simulations the use of at least one business transformation outsourcing service by a client organization.

CROSS-REFERENCES TO RELATED APPLICATIONS, AND COPYRIGHT NOTICE

The present application is related to a co-pending patent applicationentitled Simulation of Business Transformation Outsourcing of Sourcing,Procurement and Payables, filed on even date herewith. This co-pendingapplication is assigned to the assignee of the present application, andherein incorporated by reference. A portion of the disclosure of thispatent document contains material which is subject to copyrightprotection. The copyright owner has no objection to the facsimilereproduction by anyone of the patent document or the patent disclosure,as it appears in the Patent and Trademark Office patent file or records,but otherwise reserves all copyright rights whatsoever.

FIELD OF THE INVENTION

The present invention relates generally to computer modeling orsimulation, and more particularly to methods and systems of simulationof complex services.

BACKGROUND OF THE INVENTION

Organizations who will pay for receiving complex services, need toestimate the costs and benefits of (i.e. the “business case” for) theservices. So do those providing the services. For example, one area ofconcern is the estimated cost to the provider of providing services,which is distinct from the price that a customer or client will pay forreceiving the services. Such estimation can be very difficult, forcomplex business scenarios with many variables. This is true of businesstransformation outsourcing, for example. “Business transformationoutsourcing” (BTO) refers to arrangements where a service providerassumes responsibility for performing one or more business processes. Awide range of business processes may be involved, including humanresources, customer relationship management, shipping, finance,accounting, insurance claims processing, banking back office services,and many others. BTO typically involves changing the business processthrough information technology. This may include a core businessprocess.

These arrangements may involve multiple alternatives, affecting manyemployees and business partners, or affecting many computers, networksand software applications, for example. Thus these arrangements aredifficult to evaluate. This problem is not addressed by known simulationtechnology. There are simulators of business processes, but they do notshow the impact of business transformation outsourcing with variousalternatives.

Thus there is a need for computer simulation, that shows the effects ofvarious conditions and decisions, pertaining to a wide range of businesstransformation outsourcing services.

SUMMARY OF THE INVENTION

An example of a solution to problems mentioned above comprises:performing a benefits simulation, performing a process simulation,performing an information technology simulation, performing a valuesimulation, providing interactions among the simulations, andrepresenting with the simulations the use of at least one businesstransformation outsourcing service by a client organization.

BRIEF DESCRIPTION OF THE DRAWINGS

A better understanding of the present invention can be obtained when thefollowing detailed description is considered in conjunction with thefollowing drawings. The use of the same reference symbols in differentdrawings indicates similar or identical items.

FIG. 1 illustrates a simplified example of a computer system capable ofperforming the present invention.

FIG. 2 is a block diagram illustrating an example of simulation ofBusiness Transformation Outsourcing services.

FIGS. 3A and 3B make up a flow chart, illustrating an example of a BTOsimulation process.

FIGS. 4A and 4B make up a block diagram, illustrating an example ofsystems and methods of simulation, including different modes fordifferent end-users.

FIG. 5 is a diagram illustrating one example of output from simulations.

DETAILED DESCRIPTION

The examples that follow involve the use of one or more computers andmay involve the use of one or more communications networks. The presentinvention is not limited as to the type of computer on which it runs,and not limited as to the type of network used.

The following are definitions of terms used in the description of thepresent invention and in the claims:

“Application” means any specific use for computer technology, or anysoftware that allows a specific use for computer technology.

“Benefits input” means any data utilized in computing measurementsregarding economic benefit.

“Benefits simulation” means any simulation regarding economic benefits.

“Business process” means any function performed by any enterprise,group, or organization; the function may involve providing goods orservices of any kind, or may involve internal matters. The function mayinclude, but is not limited to, sourcing, procurement, payables, humanresources, customer relationship management, shipping, finance,accounting, insurance claims processing, and banking back officeservices.

“Business transformation outsourcing service” means any arrangementwhere a service provider assumes responsibility for performing one ormore business processes. This may include changing the business processthrough information technology. This may include a core businessprocess, but it is more likely that clients will outsource non-corebusiness processes, since this allows them to focus on their remainingcore processes.

“Business transformation outsourcing” (BTO) is a broader term than“business process outsourcing,” which implies lower labor rates forperforming a non-core business process.

“Client-server application” means any application involving a clientthat utilizes a service, and a server that provides a service. Examplesof such a service include but are not limited to: information services,transactional services, access to databases, and access to audio orvideo content.

“Comparing” means bringing together for the purpose of finding anylikeness or difference, including a qualitative or quantitative likenessor difference.

“Component” means any element or part, and may include elementsconsisting of hardware or software or both.

“Computer-usable medium” means any carrier wave, signal or transmissionfacility for communication with computers, and any kind of computermemory, such as floppy disks, hard disks, Random Access Memory (RAM),Read Only Memory (ROM), CD-ROM, flash ROM, non-volatile ROM, andnon-volatile memory.

“Cost-benefit assessment” means any comparison or evaluation involvingcosts and benefits.

“Information technology input” means any data utilized in computingmeasurements regarding the use of information technology.

“Information technology simulation” means any simulation regarding theuse of information technology.

“Mapped” or “Mapping” refers to associating, matching or correlating.

“Measuring” means evaluating or quantifying; the result may be called a“Measure” or “Measurement”.

“Output” or “Outputting” means producing, transmitting, or turning outin some manner, including but not limited to printing on paper, ordisplaying on a screen, writing to a disk, or using an audio device.

“Process input” means any data utilized in computing measurementsregarding a business process.

“Process simulation” means any simulation regarding a business process.

“Project” means any assignment, enterprise, job, undertaking or venture,in any industry or profession; for example, it may involve providingservices, or a mixture of goods and services.

“Sourcing” means finding and utilizing preferred suppliers.

“Spending input” means any data utilized in computing measurementsregarding spending.

“Spending simulation” means any simulation regarding spending.

“State” means any set of stored data at some point in time.

“Storing” data or information, using a computer, means placing the dataor information, for any length of time, in any kind of computer memory,such as floppy disks, hard disks, Random Access Memory (RAM), Read OnlyMemory (ROM), CD-ROM, flash ROM, non-volatile ROM, and non-volatilememory.

“Value input” means any data utilized in computing measurementsregarding economic impact.

“Value simulation” means any simulation regarding economic impact.

FIG. 1 illustrates a simplified example of an information handlingsystem that may be used to practice the present invention. The inventionmay be implemented on a variety of hardware platforms, includingembedded systems, personal computers, workstations, servers, andmainframes. The computer system of FIG. 1 has at least one processor110. Processor 110 is interconnected via system bus 112 to random accessmemory (RAM) 116, read only memory (ROM) 114, and input/output (I/O)adapter 118 for connecting peripheral devices such as disk unit 120 andtape drive 140 to bus 112. The system has user interface adapter 122 forconnecting keyboard 124, mouse 126, or other user interface devices suchas audio output device 166 and audio input device 168 to bus 112. Thesystem has communication adapter 134 for connecting the informationhandling system to a communications network 150, and display adapter 136for connecting bus 112 to display device 138. Communication adapter 134may link the system depicted in FIG. 1 with hundreds or even thousandsof similar systems, or other devices, such as remote printers, remoteservers, or remote storage units. The system depicted in FIG. 1 may belinked to both local area networks (sometimes referred to as intranets)and wide area networks, such as the Internet.

While the computer system described in FIG. 1 is capable of executingthe processes described herein, this computer system is simply oneexample of a computer system. Those skilled in the art will appreciatethat many other computer system designs are capable of performing theprocesses described herein.

FIG. 2 is a block diagram illustrating an example of simulation ofBusiness Transformation Outsourcing services. Beginning with anoverview, this example involves Business Transformation Outsourcing(BTO) deals (i.e. deals involving outsourcing of business processes,where the business processes may be substantially changed, often throughinformation technology [IT]). BTO simulation may be used to demonstrate,or estimate, benefits and costs of proposed outsourcing deals. A serviceprovider may use BTO simulation to develop and revise proposals to aprospective client organization. A service provider may use BTOsimulation during the course of an engagement with a clientorganization, to adjust to new scenarios.

Continuing with an overview of this example in FIG. 2, BusinessTransformation Outsourcing simulation generally comprises fourinterlocking simulations: Benefits (simulation 211), Process (simulation214), IT (IT transformation simulation 216), and Value (simulation 223).The Benefits (simulation 211) simulation shows how BTO could generatebusiness benefits for the client over a multi-year horizon. (Each BTOservice has different benefits.) The Process simulation 214 and ITtransformation simulation 216 show how mature processes, skilled staff,and innovative technology enable those benefits. Finally, the Valuesimulation 223 shows the potential impact of all the foregoing on theclient firm's market valuation and share price, for example.

This example in FIG. 2 shows the effects over time of various conditionsand decisions (e.g. see blocks numbered 200 and 207-210) pertaining toBusiness Transformation Outsourcing (BTO) of various services. Thisexample involves simulating business cases (i.e., the connection betweenBTO services and their impact on the economic value of the client firm,shown by block 224, “Economic value”). This example involvesinterlocking simulations (i.e., providing interactions amongsimulations, shown by arrows). For instance, outputs from businessbenefits simulation 211, Process simulation 214, and IT transformationsimulation 216 provide input to Value simulation 223, via net savings,block 220. Some inputs may affect more than one simulation. Suchinteractions are shown by multiple arrows leading away from BTO Servicesblock 210, and IT Transformation Periods block 212.

This example in FIG. 2 involves performing a business benefitssimulation (block 211). Business Transformation Outsourcing of variousservices are simulated, subject to various assumptions and alternatives,including adoption of IT (shown by block 213, “IT Transformationassumptions”). Thoroughly analyzing the effects of alternatives over amulti-year, multi-country deal is something that cannot be done withoutBTO simulation. BTO simulation makes what would otherwise be anunsolvable problem solvable.

Turning now to some details of this example in FIG. 2, consider businessbenefits simulation 211—(Simulations are numbered for reference, but achange in one is automatically reflected in all the others, ifapplicable.) Services such as human resources (HR), customerrelationship management (CRM), and finance and accounting (F&A) eachutilize a unique front-end simulation (at 211) of the business benefitsof that particular BTO Service. On the other hand, simulations of BTOfor human resources, customer management, and finance and accountingreuse much of the back-end simulations (the Process simulation 214, ITsimulation 216 and Value simulation 223).

The business benefits simulation 211 for sourcing, procurement, andpayables is the spending simulation, which is partially applicable tofinance and accounting. (It is applicable to payables, but not otherfinance and accounting services, such as receivables or taxes.)

The business benefits simulation 211 for human resources simulates [1]the transformation of human resources from a separate business functionfocused mainly on recruiting, hiring, promotion, and layoff transactionsto an integral part of what all managers do with the aid of on—demandhuman resources systems, and [2] the resulting refocusing of theremaining human resources services onto strategic issues, such aseducation, diversity, compensation, retention, and benchmarking. Thesourcing, procurement, and payables business benefits simulation at 211directly quantifies its benefits in dollars saved (at 215). On the otherhand, the human resources business benefits simulation at 211 preferablyquantifies first in terms of improved education levels, diversity,compensation benchmarks, and retention rates; then in terms of thedollar impact (at 215) of those improvements, which may be reflected inhigher productivity as well as dollars saved.

Block 215 in FIG. 2 represents measures of business benefits in general.Savings is a primary benefit of sourcing, procurement, and payablesservices, and some savings will arise from other BTO services as well. Aprimary benefit of other BTO services may be something other thansavings. This is particularly true in the areas of CRM and HR, where theprimary business benefits could turn out to be things like highercustomer service levels, increased market share, increased revenue,higher employee satisfaction, more effective employee recruiting, andincreased employee retention.

The business benefits simulation 211 for customer relationshipmanagement simulates [1] the direct impact of implementing one or morecustomer relationship management solutions, such as a self-serve website and/or a voice response unit (VRU) in lieu of some calls handled todate by human customer service agents, [2] the indirect impact of havinga full 360-degree view of customers, such as fewer calls, shorter calls,or higher customer satisfaction, and [3] the impact of new markets andmarket segmentation made possible by customer relationship management,such as higher levels of customer service for “preferred customers.”(The term, “360-degree view,” refers to the ability of an organizationto see all of its interactions with a given customer regardless of when,where, or how those interactions occurred, including by phone, VRU, website, e-mail, instant messaging, fax, pager, web meeting, in person,etc. This also involves steering current and future interactions ontothe lowest-cost/highest-effectiveness channel.) Thus, the businessbenefits of BTO customer relationship management may be quantified interms of higher productivity, higher profitability, and higher customersatisfaction, as well as dollars saved (at 215).

Finally, the business benefits simulation 211 for finance and accountingsimulates [1] efficiencies in transaction processing due toimplementation of finance and accounting solutions, such as financialsoftware packages, and labor arbitrage by moving manual work to whereverlower-cost resources are available, [2] higher service levels availablefrom finance & accounting professionals whose career path has beenchanged from “back office” to “front office,” [3] more sophisticatedopportunity identification by professionals specializing in areas notwell served before outsourcing, such as lease accounting or pensionfinancing, and [4] compliance with regulations and laws, such asSarbanes-Oxley. (The terms “back office” and “front office” refer to thefact that the business processes most likely to be outsourced are thosethat are not a core competency. However, once the processes have beenoutsourced, the people performing those business processes have movedfrom the “back office” of their old employer to the “front office” oftheir new employer, where their new responsibility is to serve theoutsourcer's customers, which may include their former employer as wellas other customers.)

Consider an example of output (at 215) from a spending simulation forsourcing, procurement and payables, as one particular instance ofbusiness benefits simulation 211. Results may be presented in aspreadsheet, with a row for each month, from Month 1 of Year 1, to thesimulation horizon. Each month has a status label (As Is, Transition, orTo Be ). Spending savings (one particular instance of business benefitssavings, block 215) may be represented by a column for monthly spendingsavings, and a column for cumulative spending savings. Non-zero valuesmay begin to appear in columns for spending savings, in the firsttransition month.

Next, consider process simulation 214. A flow model shows howtransactions flow through the subprocesses underlying sourcing,procurement, and payables. The rate at which information technology andlower-cost resources are substituted for the old way of performing thebusiness process affects how many transactions there are, where theyflow, and what they each cost to process.

Process inputs for process simulation 214 are shown by “costassumptions” 207, “productivity assumptions” 208, “cycle timeassumptions” 209, and “BTO services” 210. The process simulation 214computes the number of transactions during each period, subject to thestatus of each period (As Is, Transition, or To Be ) In some examples,business process simulation 214 may be a flow model, not a queuing model(i.e. it shows how many transactions flow through each business processduring each period, but does not simulate the processing of eachindividual transaction). In other examples, a process queuing model maybe implemented.

Next, consider IT transformation simulation 216. The tasks needed todesign, build, implement, operate and maintain the new informationtechnology (and retire old IT) are simulated. IT inputs for ITtransformation simulation 216 are shown by “IT Transformation periods,”block 212 and “IT Transformation assumptions,” 213. The ITtransformation simulation 216 computes the transformation cost perperiod by phase using IT resource costs and expenses, subject to theschedule. Phases can be serial, overlapping, or concurrent. They tend tobe serial when the scope of work can be decomposed into independentreleases. They tend to be overlapping or concurrent when the same workmust be accomplished at multiple locations.

Consider an example of output (at 221) from IT transformation simulation216. Results (IT transformation cost 221) may be presented in aspreadsheet, with a row for each month, from Month 1 of Year 1, to thesimulation horizon. Columns may show costs to design, build, implement,and operate the new information technology. In the early months,non-zero values may be seen only in the columns showing costs to design,build, and implement. Non-zero values may begin to appear in a columnfor operation and maintenance cost after the new information technologyis designed, built and implemented.

Next, consider Value simulation 223. The effects of net businessbenefits such as net savings (Block 220), from the previous simulations,on the client organization's financial position are simulated. So areother alternatives with financial impact, such as acquisition of assetsin conjunction with BTO. Block 220 in FIG. 2 represents measures of netbusiness benefits in general. The value simulation 223 computes theimpact of the net business benefits (Block 220) on the client'sfinancial statements, subject to additional financial transactions, suchas asset acquisition or financing of fees. (Net business benefits at220, Company financials 222, and any additional financial transactionsare value inputs to value simulation 223.) The connection between BTOservices and their impact on the economic value of the clientorganization is symbolized by block 224, “Economic value.” This involvesoutputting one or more measures of economic value (a client's view ofhow BTO will affect the client organization). When the client's cost ofcapital is considered, the economic value of net business benefits(Block 220) from Business Transformation Outsourcing can be substantial.

Continuing with some details of this example in FIG. 2, inputs,simulations, and outputs are further described below. Regarding BTOservices 210, the scope of services determines which business processesa BTO service provider will perform for the client organization. Costassumptions inputs 207 define the human resources needed to perform thebusiness processes today (“As Is”) and during outsourcing (“To Be”). Thenumber of full-time equivalent (FTE) resources the client uses today,plus their cost rates by location, are entered. Inputs 212 and 213define the information technology (IT) resources needed to achieve thetransformation from “As Is” to “To Be” processes. Company financials 222preferably includes the client organization's balance sheet and incomestatement, along with any BTO service provider's financial transactions,such as asset acquisition or financing of fees.

Simulations and outputs in FIG. 2 may include identifying gaps and flawsin the client organization's current business processes, by comparingthem to mature processes. Another example is identifying differences inscope of services, between the As Is and To Be views. These comparisonsare useful. The As Is view may look cheaper, but it may be flawed andincomplete. The To Be view will often have larger scope if it iscomplete and mature.

Regarding output of net business benefits (block 220), one example ofoutput from the simulations is an executive summary of the simulations,which (1) computes the net business value used in the value simulation223 and (2) summarizes the results of all the simulations. In general,business benefit (block 215), plus process savings (block 219), minus ITtransformation cost (block 221), equals net business benefit (block220). This may involve outputting cost quantities and benefit quantitiesfor a number of years. (See also FIG. 5.)

FIGS. 3A and 3B make up a flaw chart, illustrating an example of a BTOsimulation process. To begin with an overview, Block 301, configuration,represents creation of a model, and establishing the model's initialstate. Blocks 303-309 represent next-step functions that change themodel's state to represent the next month in a period to be simulated.Then the process enters block 310, to summarize results. Some examplesdrawn from one particular instance of business benefits simulation (aspending simulation for sourcing, procurement and payables) will begiven for FIGS. 3A and 3B. Thus blocks 303-304 involve references to aspending simulation for sourcing, procurement and payables, as oneparticular instance of business benefits simulation. Block 309 involvesreferences to net savings, as one particular instance of net businessbenefits.

In this example, all the simulations are discrete rather thancontinuous. The simulations do not embody optimization models. BTOengagements are far too complex overall to apply any familiaroptimization algorithm. Indeed this is the principal reason for usingsimulations rather than analytical models to build business cases.

This example begins with block 301, configuration. Here is a list ofsome items preferably involved in configuration:

-   -   Drivers (a driver is an input that is a major determinant of        values computed by the simulation.)    -   Scope of services (business processes such as HR, CRM, Sourcing,        Procurement, Payables, etc.)    -   Options: Data Warehousing, etc.    -   Schedule: Simulation Horizon, Design and        Build+Implementation+Operation Phases    -   Software Requirements: Customer-licensed vs. Outsourced        Inflation    -   Pricing Model for Outsourcing    -   Output Resolution: Monthly, Quarterly, Yearly

Next, consider some details of configuration and inputs represented byblock 301. Input stages are presented in order, as they are typicallydone initially, but inputs can be modified in any order, and all theaffected outputs are automatically recomputed. The first input is to aconfigurator that sets up the simulations. One or more drivers areincluded (annual spending drives the spending simulation, for example).The scope of services determines which business processes a BTO serviceprovider will perform for the client. Service options are additionalproducts and services that could be provided in support of thosebusiness processes. The simulation horizon determines the number ofyears of simulated time the simulations will cover.

Output formatting controls the amount of detail in outputs: (1) monthly,quarterly, or yearly summaries and (2) details pertinent to the BTOservices being simulated, such as commodities for Procurement, customersfor CRM, employees for HR, accounts for F&A, or policies for insurance.Schedule inputs control (1) the number of IT implementation phases andthe amount of work done in each and (2) when the transition from the AsIs to To Be processes will occur. Data prepared by the configuratorincludes entities relevant to the BTO services being simulated andschedule parameters, for example. Finally, inputs to and data from theconfigurator can be displayed or printed.

Continuing with some details represented by block 301, the next set ofinputs define the human resources needed to perform the businessprocesses today (“As Is”) and during outsourcing (“To Be”). The numberof full-time equivalent (FTE) resources the client organization usestoday, plus their cost rates by location, are entered. Since clientorganizations may have resource types that are not in the standard set,the resource types set is editable.

The next set of inputs define the information technology (IT) resourcesneeded to achieve the transformation from As Is to To Be processes. Thenext set of inputs define non-labor expenses. The non-labor expensetypes set is editable. For each non-labor expense type, the number ofoccurrences of an appropriate expense driver is multiplied by thecorresponding expense rate. The last set of inputs includes the clientorganization's balance sheet and income statement, along with any BTOservice provider financial transactions, such as asset acquisition orfinancing of fees.

Decision 302 is at the top of a loop, representing repetition of blocks303-309 for each month, from Month 1 of Year 1, to the simulationhorizon. In other words, the text in 302 could ask: “Repeat for nextmonth within simulation horizon?” The “Yes” branch will be taken torepeat blocks 303-309, until each month in a period to be simulated hasbeen covered. Then the process enters block 310, to summarize results.

Blocks 303-304 represent operations included in the benefits simulation,discussed above in connection with FIG. 2 (a spending simulation forsourcing, procurement and payables, for example). Block 303 representscomputing drivers for each in-scope business process (e.g. computingspending and number of purchase orders and invoices, for sourcing,procurement and payables). Some example parameters are: Demand Patterns,and Inflation. (Parameters mentioned in this example are data valuesincorporated in the simulator rather than input by users.)

Block 304 represents computing business benefits relative to aninflation-adjusted baseline (e.g. computing spending savings relative toinflation-adjusted baseline spending, for sourcing, procurement andpayables).

Blocks 305-307 represent operations included in the process simulation,discussed above in connection with FIG. 2. Block 305 representscomputing the number of transactions flowing through each in-scopebusiness process (e.g. computing the number of purchase orders andinvoices for sourcing, procurement and payables). Some exampleparameters are: Cost Rates by Location for BTO service provider,Non-labor Expenses, Resource Counts and Productivity Rates by ResourceTypes and Location.

Block 306 represents computing As Is and To Be resources, costs, andprice by business process and location. In general, the number of BTOservice provider resources needed is computed by (1) entering anappropriate FTE driver for each resource type, (2) looking up the numberof occurrences of each driver, and (3) dividing the number ofoccurrences by a conversion factor. The resulting resource counts arethen multiplied times the cost rate for each FTE's location to get As Isand To Be resource costs. (Selecting the right mix of on-site, on-shore,and off-shore resources is involved in achieving service levelagreements at a competitive price.) Block 307 represents computingbusiness process benefits in general (computing business process costsavings relative to inflation-adjusted baseline cost, as one specificexample).

Block 308 represents operations included in the IT simulation. (See thediscussion of IT transformation simulation 216 above in connection withFIG. 2.) Block 308 represents computing information technologyresources, costs, and schedule for each phase. Parameters are: CostRates by Location, Non-labor Expenses, Resource Counts and ProductivityRates by Resource Types and Location. IT resources are computedseparately from non-IT resources because (1) there are no As Isresources to simulate and (2) some IT resources are needed for only alimited time, whereas non-IT resources are needed for the entiresimulation. The IT resource type set is editable to accommodate specialneeds. For each resource type, the number of occurrences of anappropriate driver is divided by a conversion factor that yields workeffort. The total work effort for finite-time activities (Design andBuild and Implementation) and schedule parameters are used to computethe schedule. The schedule recognizes that completion of the finite-timeactivities initiates the on-going IT activities (operation andmaintenance). The FTE's needed to meet that schedule are computed.Resource counts are multiplied by cost rate for each FTE's location toget IT resource costs.

Block 309 represents computing net business benefits (e.g. computing netsavings, as one particular instance of net business benefits). Block 310represents summarizing all results by quarter and year. This may involveoutputting cost quantities and benefit quantities for a number of years.(See also FIG. 5.)

Block 311 represents operations included in the value simulation. (Seethe discussion of value simulation 223 above, in connection with FIG.2.) Block 311 represents computing the impact of net business benefitson a client's business value (e.g. computing impact of net savings onclient's business value, as one specific example). Parameters are:Client Financial Statements, Adjustments for industry and geographiccomparability.

Block 312 represents analyzing revenue, cash flow, and gross margin byyear. Parameters are: Gross Margin and Contingency, Base and Percent ofSpending.

Block 313 represents generating tables and charts in time series. Thisinvolves outputting one or more measures of economic value for thebusiness transformation outsourcing service.

Regarding FIG. 3, the order of the operations described above may bevaried. For example, it is within the practice of the invention for thebenefits simulation, process simulation, and IT simulation to occursimultaneously. Blocks in FIG. 3 could be arranged in a somewhatdifferent order, but still describe the invention. Blocks could be addedto the above-mentioned diagram to describe details, or optionalfeatures; some blocks could be subtracted to show a simplified example.

FIGS. 4A and 4B make up a block diagram, illustrating an example ofsystems and methods of simulation, including different modes fordifferent end-users. This example in FIGS. 4A and 4B involvesrepresenting with simulations the use by a client organization of one ormore business transformation outsourcing services, such as HR, CRM,sourcing, procurement, and payables, etc. This example involvesperforming one or more simulations, such as: a simulation in researchand development mode, block 440, a simulation in internal use mode,block 420, and a simulation in external use mode, block 430. These modesare named from the BTO service provider's point of view, so internal usemode, block 420, is suitable for the BTO service provider's internalpurposes. Internal purposes include pricing, sales management, riskmanagement, and services delivery planning, for a BTO servicesarrangement (see block 404). External use mode, block 430, is suitablefor the BTO service provider's dealings with a client organization.

Inputs for External use (block 405), are a subset of those for Internaluse (block 402), which are in turn a subset of inputs for Research &Development use (block 408). Outputs have the same hierarchical subsetrelationship. External (block 406), is a subset of Internal (block 403),and Internal is a subset of R&D (block 409). When run for clients (block430), the simulations are usually deterministic. When the simulator isrun without any random variability, its results are deterministic (whichmeans the same inputs always generate the same output). Thisrepeatability is helpful in conversations with client organizations. Butwhen run for internal research purposes (block 440), and risk management(block 420), random variability can be injected and the simulations runmany times to quantify expected values. When the simulator is run withrandom variability in selected variables, its results are stochastic(which means the same inputs generate somewhat different output). Thesevariations are helpful during research (block 440) because multiplesimulation runs can be analyzed statistically. Stochastic simulationsmay be run for some clients.

Block 420 symbolizes conducting simulations in internal use mode,typically by a provider of BTO services. At block at 402, information isgathered about a proposed BTO deal, and inputs are provided to BTOsimulator 401. Simulations are run at block 401, producing internalsimulation results at block 403. Actions taken at block 404 includeanalyzing results, serving purposes such as: pricing, sales management,risk management, and services delivery planning. A result of informationreceived at block 404 may be feedback to the model at block 402,symbolized by the arrow connecting block 404 and block 402.

Regarding external use mode, within block 430, actions taken at block407 include receiving client feedback, on topics such as business value,price, risk sharing, and schedule. A result of information received atblock 407 may be feedback to the model at 402, for internal use,symbolized by the downward-looping arrow connecting block 407 and block402. There also may be feedback to the model at block 405, foradjustment purposes, symbolized by the arrow connecting block 407 andblock 405.

In the research and development mode, shown in block 440, researchprojects are designed at block 408, and BTO simulations run at block401. There may be feedback for purposes of improving or enhancing BTOsimulator 401, symbolized by arrows connecting block 409, block 410 andblock 401, shown inside block 440. Based upon research simulationresults at block 409, findings are analyzed and published, at block 411.

The computers, and communications among computers and people, shown inblocks 420, 430, and 440, may serve as means for performing simulationsin different modes for different end-users. BTO simulator 401, shown inblocks 420, 430, and 440, may be implemented with software running onone computer, or on different computers that communicate via a network,for example. Inputs may come directly from users at 402, 405, or 408, orfrom another source, such as stored data for a project. A computer atblock 402, 405, or 408 may serve as means for receiving inputs. Acomputer at block 401, running simulations, may serve as a means ofresponding to said inputs, for performing simulations. A computer atblock 404, 407, or 411, or a printed document, may serve as means foroutputting results such as measures of economic value.

FIG. 5 is a diagram illustrating one example of output from one speciesof simulation, which simulates particular BTO services: sourcing,procurement, and payables. FIG. 5 shows an example of outputting costquantities and benefit quantities for a number of years, as a bar graph.Each bar, numbered 501-510, represents one year in a 10-year period thatis simulated for a client organization. Each bar, numbered 501-510,represents cost quantities and benefit quantities for a particular year.As shown in the legend in box 509, benefit quantities include spendingsavings, process savings, and net savings. Net savings is the benefitquantity represented by line 511. Cost quantities include processresources, process expenses, and Information Technology cost. Withineach bar, numbered 501-510: spending savings+plus processsavings−process resources−process expenses−IT cost=net savings. This isa variation of the general formula mentioned in connection with FIG. 2:business benefit savings+process savings−IT cost=net savings.

This final portion of the detailed description presents a few details ofan example implementation, that simulated particular BTO services:sourcing, procurement, and payables. Output similar to FIG. 5 wasproduced, for example. A simulator was implemented with software capableof running on a desktop computer or laptop computer. This exampleimplementation had a familiar, spreadsheet-style user interface, and wasbuilt on spreadsheet software.

Other hardware and software could be used. A simulator could beimplemented by using object—oriented programming with the JAVAprogramming language and database-management software, for example. Asimulator could be implemented as a client-server application forexample. Another possibility would be to implement it as a web service(i.e., a computer application executable over an intranet or theInternet).

In conclusion, we have shown examples of computer simulation, that showsthe effects of various conditions and decisions, pertaining to a widerange of business transformation outsourcing services.

One of the possible implementations of the invention is an application,namely a set of instructions (program code) executed by a processor of acomputer from a computer-usable medium such as a memory of a computer.Until required by the computer, the set of instructions may be stored inanother computer memory, for example, in a hard disk drive, or in aremovable memory such as an optical disk (for eventual use in a CD ROM)or floppy disk (for eventual use in a floppy disk drive), or downloadedvia the Internet or other computer network. Thus, the present inventionmay be implemented as a computer-usable medium havingcomputer-executable instructions for use in a computer. In addition,although the various methods described are conveniently implemented in ageneral-purpose computer selectively activated or reconfigured bysoftware, one of ordinary skill in the art would also recognize thatsuch methods may be carried out in hardware, in firmware, or in morespecialized apparatus constructed to perform the method.

While the invention has been shown and described with reference toparticular embodiments thereof, it will be understood by those skilledin the art that the foregoing and other changes in form and detail maybe made therein without departing from the spirit and scope of theinvention. The appended claims are to encompass within their scope allsuch changes and modifications as are within the true spirit and scopeof this invention. Furthermore, it is to be understood that theinvention is solely defined by the appended claims. It will beunderstood by those with skill in the art that if a specific number ofan introduced claim element is intended, such intent will be explicitlyrecited in the claim, and in the absence of such recitation no suchlimitation is present. For non-limiting example, as an aid tounderstanding, the appended claims may contain the introductory phrases“at least one” or “one or more” to introduce claim elements. However,the use of such phrases should not be construed to imply that theintroduction of a claim element by indefinite articles such as “a” or“an” limits any particular claim containing such introduced claimelement to inventions containing only one such element, even when thesame claim includes the introductory phrases “at least one” or “one ormore” and indefinite articles such as “a” or “an;” the same holds truefor the use in the claims of definite articles.

1. A method of simulation, in a computer, said method comprising:receiving, in the computer, for at least one business transformationoutsourcing service, benefits inputs, process inputs, informationtechnology inputs, and value inputs; based on said inputs, performing,in the computer, a benefits simulation, a process simulation, aninformation technology simulation, and a value simulation; andoutputting, by the computer, at least one measure of economic value forsaid business transformation outsourcing service, wherein: the benefitssimulation, process simulation, information technology simulation, andvalue simulation have a plurality of periods of simulation, each periodhaving either a current condition under which no outsourcing by thebusiness transformation outsourcing service is performed, a transitionalcondition in which outsourcing is being put into place, or anoutsourcing condition in which outsourcing by the businesstransformation outsourcing service is performed, and wherein there is atleast one period having a current condition, at least one period havinga transitional condition, and at least one period having an outsourcingcondition, the process simulation, based on the inputs, computes both anumber of transactions during each period of simulation, of theplurality of periods of simulation, and a corresponding process cost,based on a status of the particular period being under one of currentconditions, transitional conditions, or during outsourcing conditions,the process simulation utilizes a flow model showing how transactionsflow through sub-processes, wherein a rate at which informationtechnology is substituted for current processes, represented by aschedule, affects the computation of the number of transactions during atransitional condition period of simulation in the benefits simulation,process simulation, and information technology simulation, and thesub-processes through which the transactions flow in the flow model, thebusiness benefits simulation, based on the inputs, computes a businessbenefits savings, the information technology simulation simulates, basedon the inputs, the tasks needed to design, build, implement, operate,and maintain new information technology to implement the outsourcing,and computes a transformation cost for each period of simulation, of theplurality of periods of simulation, based on the status of theparticular period being under one of current conditions, transitionalconditions, or during outsourcing conditions, the business benefitssavings, processing savings, and information technology transformationcosts are combined to identify a net savings of transitioning fromcurrent conditions to outsourcing conditions, the value simulationsimulates, based on the net savings and business financial inputinformation, effects of transitioning from current conditions tooutsourcing conditions, on a financial position of the business, and theat least one measure of economic value for the business transformationoutsourcing service is calculated based on the effects of transitioningfrom current conditions to outsourcing conditions on the financialposition of the business.
 2. The method of claim 1, further comprising:performing said simulations in different modes for different end users.3. The method of claim 2, wherein said performing further comprisesperforming one or more simulations chosen from: a simulation in researchand development mode, a simulation in internal use mode, and asimulation in external use mode.
 4. The method of claim I, wherein saidperforming a benefits simulation further comprises simulating at leastone business transformation outsourcing service chosen from: sourcing,procurement, payables, human resources, customer relationshipmanagement, shipping, finance, accounting, insurance claims processing,and banking back office services.
 5. The method of claim 1, furthercomprising: mapping various forms of said benefits simulation to variousforms of said business transformation outsourcing service.
 6. The methodof claim 1, further comprising: representing various forms of saidbusiness transformation outsourcing service mainly by utilizing variousforms of said benefits simulation.
 7. The method of claim 1, furthercomprising: outputting cost quantities and benefit quantities for aplurality of years.